Your partnership itself does not pay income tax at the corporate level. Instead, taxes go to you and to the other countries of the association through partnership. Your partnership still needs to submit an annual refund of information (form 1065) to report its income, deductions, profits and losses to the IRS. Name your company. The name of your partnership is automatically the name of all partners. For example, if your name is Sue Johnson and you and Bob Green open a flower shop together, your business will be legally called “Johnson and Green.” To operate under another name, you must register a DBA (Doing Business As) name to obtain the fictitious or assumed name of your company. To expand the previous example, you and Bob should register with your government so that you can do business with the name Flowers-R-Us. A general partnership does not pay income taxes. Instead, profits and losses are paid to each of the partners responsible for tax reporting on their personal income tax returns.
A general partnership is easy to set up, but it is also risky because you and the company, as general partners, are the same thing; If the business is being sued or creditors owe money, it is as if you are being sued or owe creditors. As part of a general partnership, you also face the challenge of sharing responsibilities, profits and losses with other partners, unlike an individual company where you would have full control over business decisions and full responsibility for your company`s finances. The main reason for the registration requirement is consumer protection. The partners of a company are personally responsible for social debts. A registration is necessary so that partners cannot attempt to circumvent personal liability by hiding behind a company name. Anyone who does business with a partnership should be able to finish their identity. For example, if you rent ABC Plumbing to replace your water heater, and the plumber breaks pipes and floods your home, who are you going to pay for the damage? If your country requires the registration of fictitious names, you can contact the registrar and find out the names and addresses of partners who operate ABC Plumbing. A general partnership is established whenever two or more people agree to go into business together, whether or not they have a written contract. It is a good idea to formalize the details in a partnership agreement that defines the rights, responsibilities and share of the benefits of each partner.
Current legislation is the law that controls partnership and resolves disputes between partners.